10 Mistakes Entrepreneurs Make with Money

Self-employed, entrepreneur, or small biz owner… you’ve taken the road less traveled. You are freedom-oriented and independent. You’ve traded the so-called security of a J.O.B. for the opportunity to pave your own path.

I understand. After a job in banking and several years working for a typical financial planning firm, I also got “the call.” I had a unique message to share, a difference to make—a movement to start.

I no longer felt that “typical” financial planning advice allowed me to do what was BEST for my clients. I watched people lose FORTUNES in the market, only to be told to just keep doing the same thing with their dollars! And I saw people frustrated that there were no other options.

(Of course, that’s how many people become entrepreneurs; they develop a passion to solve a problem!)

Have you ever wondered if YOU are on the right financial path?

I have! I was not taught that there were other options. Better options. But I always felt like something was “missing” from typical financial advice.

When I went searching, I discovered those better options. They were the principles and strategies that have
helped people build sustainable wealth long before “Financial Planning” even existed.

I studied the financial principles and strategies used by successful people—many of them entrepreneurs. I codified these principles and strategies and coined it “Prosperity Economics.” This became the foundation for Prosperity Thinkers.

The wealthy have practiced Prosperity Economics for centuries. (Yes, even before I coined the term, THIS is how people built and kept wealth.) There has always been an alternate path to building wealth WITHOUT the Big Banks and Wall Street firms—I just had to find it!

Typical financial planning tells you to buy mutual funds and keep them in a retirement account and WAIT… for decades… with your fingers crossed that someday you’ll have enough to someday retire. Yet too many people who DO retire end up BORED and BROKE!

Wealthy people keep control of their own cash. They don’t plan for “someday.” They prioritize what’s most important, pay themselves first, and protect their loved ones. They also tend to keep working and keep contributing—often long past “retirement age.” (It’s not a burden if you love what you do!)

At the end of this report, I’ll invite you to learn more and schedule a complimentary consultation. (If you want to skip ahead and book your appointment now, go right ahead.)

I’ll also show you how to learn about our 7 Principles of Prosperity™ and get a free ebook that will explain exactly what’s WRONG with financial planning, and how Prosperity Economics is DIFFERENT.

But first, I want to give you some practical advice that can help you right now. There are COMMON MISTAKES that many entrepreneurs make, mistakes that you want to avoid like the plague!

You see, not only am I an entrepreneur myself, but I’ve worked with thousands of entrepreneurs over the last two decades. Entrepreneurs are my favorite people in the world. They’re creative, caring and passionate. And sometimes… they make BIG MISTAKES with money!

Here are the 10 Mistakes to AVOID—and ten action steps you can start taking NOW to be a successful business owner or solopreneur:

Mistake #1:  You haven’t made saving money a priority.

Your “emergency fund” is a credit card. You have no regular, habitual, automatic way to save money. And you have no cash for emergencies and opportunities!

Let’s face it: business can be unpredictable. If you wanted a predictable income, you’d have a job instead of a business!

That’s why it’s EXTRA important that you, as an entrepreneur, SAVE MONEY.

Ideally, you will have an ample cushion of savings before you start your business. But business callings don’t always wait for the “right” time. That’s OK—just start where you are.

You may have “lean years and green years.” Years when you sock away cash, and other years when you raid your stash to stay afloat or expand. Make saving money an automatic habit, and your savings will be there to SAVE YOU when you need it!

DO THIS: Make saving money consistently a priority.

Mistake #2:  You aren’t charging enough to be sustainable.

Too often, entrepreneurs fail to cover even the true costs of doing business when they price their products and services. The more they sell, the further behind they get!

Many entrepreneurs feel they are profitable if they are “making money.” Money comes in alright, but then it seems there is never enough to pay taxes, insurance, or actually SAVE some of it! Ultimately, if your business doesn’t support your whole life, you’re going backwards. You need money to:

• pay all your personal bills
• pay all of your business expenses
• pay all of your taxes
• cover your insurance premiums
• save for emergencies and opportunities
• invest for the future
• invest in mentorship or education
• tithe or give
• pay off debts
• take vacations or sabbaticals
• “miscellaneous expenses” for entertainment, eating out, etc.
• plus money to take care of yourself with healthy food and wellness care.

Get honest with yourself about the money that flows in and out of your life and business. It may be uncomfortable to charge more, change your offerings, or weed out clients who can’t afford your services. But for your business to survive, it’s necessary.

DO THIS: Price your products and services so that your business can be sustainable over the long haul.

Mistake #3:  You/your family aren’t properly protected.

It breaks our heart to hear about business owners who aren’t properly insured. You probably know of situations such as these:

– A business owner passes away and leaves their family with a big financial mess.

– An accident or medical emergency arises, and an entrepreneur is not properly covered.

– A business partner or key employee passes away, and the business dies next.

– People have to start “go fund me” campaigns in the middle of personal tragedy because they weren’t prepared for a worse-case scenario.

Make sure you have all of the insurance coverage you need. If you have adequate savings, you can choose high deductibles, which will lower your premiums.

We also recommend a special kind of life insurance that can help you:

• Beat bank rates by 2-10X on your long-term savings.
• Guarantee a legacy for your heirs or the causes you care about—no matter how long you live.
• Use your savings as collateral for affordable business financing (no qualifying or credit check required!)
• Protect the “human life value” of breadwinners, parents, even your children.
• Get “three for one” coverage for permanent life insurance, long-term care needs, and cash for a terminal illness.

DO THIS: Put first things first and protect the ones you love.

Mistake #4:  You’re paying too much in taxes.

You’re probably not claiming all of the deductions you could be. You might be paying penalties for late payments or filings. You might not have the right business structure, perhaps operating as a sole proprietorship when incorporating could lower your taxes.

Money lost to taxes is gone forever… as well as the additional dollars you could have earned with it! So get good advice on reducing your taxes and follow it. One great resource is my friend Tom Wheelwright’s WealthAbility podcast.

DO THIS: Pay more attention to how much you KEEP than how much you “make.” What you keep is what matters!

Mistake #5:  You’re making common bookkeeping mistakes!

Early on in a small business, it’s typical to try to do everything yourself. However, mistakes can be costly—especially when it comes to your money!

If you like bookkeeping, are adept at it, and have time to do it, go for it. But many business owners would be better served delegating bookkeeping to a professional.

Another option is to have a professional bookkeeper help you set up your own bookkeeping system properly so that you or an assistant can take it from there.

Carrie, my own bookkeeper, is essential to our success! She shares her wisdom in this excellent article: “9 Bookkeeping Mistakes Even Smart Business Owners Make.”

DO THIS: At the very least, get professional help to set up your bookkeeping system properly.

Mistake #6:  You invest before you save.

Even though we tend to use the terms interchangeably, saving and investing are NOT the same thing!

Saving is about storing and growing your money where it is SAFE and it can be accessed if needed. Saving can be both long-term (for a lifetime) and short-term (to prepare for emergencies or to save for your next vacation.)

Investing is about getting a RETURN on your money in the form of asset growth and/or cash flow. It is usually mid-to-long-term in commitment.

The problem occurs when entrepreneurs DO have money to “save,” but they invest instead when they lack savings. The money goes into the stock market, a real estate investment, or other venture that is not liquid and cannot be USED for opportunities or emergencies!

If all you have is “investments,” and you need cash, you will have to disrupt your investments. You may have to sell stocks or mutual funds at a loss if prices are down, or you may have to pay taxes and penalties. Having proper SAVINGS in place actually protects your investments!

DO THIS: Save first… THEN invest! Build an emergency fund and/or cash value account that can cover your living expenses for 6 months before you invest.

#7:  You invest in volatile, unpredictable investments.

Oftentimes, entrepreneurs seem to have a higher tolerance for risk. But if all of your investments are in the stock market, your dollars are at the mercy of the roller-coaster ride of the markets.

Remember how the stock market was nearly cut in HALF in the Great Recession? That was the result of systemic risk. Even if you invest in healthy, profitable companies on the stock exchange, you can STILL take a huge hit if there is a crash or “correction” in the markets.

Actually, this is a common mistake that nearly ALL investors make. We’re conditioned from our very first job with a 401(k) to give a portion of our money to Wall Street, without asking too many questions. (Kate Phillips and I go into this in detail in our complimentary ebook, Financial Planning Has Failed.)

Investment risk is especially detrimental to business owners. You see, if the stock market or the economy takes a plunge, that’s usually bad for business. That means your business income and your investments could both get wiped out at the same time!

A much better strategy is to save and invest in financial vehicles that are non-correlated to the stock market. It’s fine to have stocks, just don’t put all of your eggs in one basket.

Business can be unpredictable. You don’t want your investments to be unpredictable, too!

DO THIS: Diversify outside of the stock market and aim for more predictable, reliable returns. (We’re happy to help.)

#8:  You’re not investing in yourself!

Chances are, you have been taught that “assets” and “investments” exist in bank accounts, retirement accounts, precious metals and real estate. Few of us are taught the truth: YOU are your best investment! YOU are likely the biggest bottleneck in your business—and your business’s greatest potential asset.

When you invest in yourself to—

• Learn new knowledge that can improve your business or help you charge more
• Up-level your skills (especially marketing and sales skills, which impact your bottom line)
• Surround yourself with people who make you better
• Gain personal skills and confidence that help you up-level your life
• Improve your health, vitality and energy

—You are improving your ability to earn and expand your income.

DO THIS: Read The Last Safe Investment: Spending Now to Increase Your True Wealth Forever by Michael Ellsberg and Bryan Franklin.

#9:  All of your money is locked up in a retirement fund.

To clarify—it’s a GOOD thing to have an IRA, 401(k), or other retirement fund! The problem comes when virtually ALL of your investments are in accounts that can’t be accessed until you are 59-1/2 without taxes and penalties. As a business owner, you want control over your own money.

If your dollars are in mutual funds locked up in a retirement account, you can’t invest in your OWN business… you can only invest in other people’s businesses on the stock exchange! (Kind of crazy, right?)

If you still have a job and receive an employer match, we recommend investing ONLY to the match level, then investing elsewhere where your dollars won’t be locked up.

DO THIS: Keep a portion of your money accessible so that you are prepared to invest in yourself and your business.

I also recommend my friend Garrett Gunderson’s book: Killing Sacred Cows: Overcoming the Financial Myths Destroying Your Prosperity.

#10:  You wait too long to get financial advice or professional help.

Are you a lone wolf or a do-it-yourselfer? Many entrepreneurs are. Sometimes, that stops us from getting the help we need.

There are other reasons why you might be avoiding getting financial advice:

• You’ve got “trust issues.” You’ve been burned in the past by the market or a planner.
• You have “financial shame” and you feel you should be much further along financially.
• You’ve heard about required minimums and you don’t know if you have enough to work with.
• You think you’re doing alright on your own, even if all your money is in the stock market and subject to huge risks.
• You just don’t know who to contact if you have financial questions!

As a friend, client and colleague of Iman and Afrin Khan, I want to be YOUR “Partner in Prosperity.” Whether you have a million dollars in the bank or $100/month you can save, Prosperity Thinkers is offering a complimentary consultation to you.

Why am I offering this?

My husband and I have worked with Red Elephant for five years now. They’ve given SO much to us and our community, the Prosperity Economics Movement. I am grateful for the opportunity to give back to this community!

DO THIS: 1. Click to learn more and schedule an appointment.

There’s no sales pitch—just honest advice, answers to your questions, and personal assistance if there is something we can help you with.

2. Download our complimentary resources.

Whether or not you feel ready to book an appointment, I invite you to sign up for the complimentary resources in our Prosperity Accelerator Pack. You’ll receive an ebook, an audio and a video that will help you learn:

• What’s WRONG with typical financial planning and advice.
• The Prosperity Economics solution—and why it is a better alternative!
• What the 7 Principles of Prosperity™ are and how to apply them to your finances.

This isn’t like anything you’ve heard before.

“Balance your stocks and bonds,” blah blah blah…

You see, Wall Street wants to control your money for you. And they spend millions each year on lobbyists and BILLIONS on advertising to convince you this is “normal.”

It’s not.

There is a different way… a way that can give you more financial STABILITY. A way that can help you prepare for “green years” as well as “lean years.” A way to keep more of YOUR money in YOUR CONTROL!

I hope this special report has been helpful to you. I look forward to supporting you on your unique path to prosperity.

Kim D. H. Butler
Founder, Prosperity Thinkers

P.S. Make sure you take action!

Get your Prosperity Accelerator Pack here.

Schedule your consultation now.

Want to PRINT or DOWNLOAD this Special Report? Here you go:
10-Mistakes that Entrepreneurs Make with Money